Gold To Rise On Fiat Currency Crisis, Negative Real Interest Rates, Money Printing
Many people understand that the American economy is in bad shape, but “We’re in the middle of a gold bull market that’s been going on for ten years now,” explained Joe Foster, Van Eck’s head of actively managed gold funds, “this is not a bubble and we are nowhere near the end.” Gold’s precipitous rise has come as a consequence of the fiat currency crisis, in which debt saddled countries have resorted to stimulative policies that involve money printing and competitive exchange rate depreciation. This, in turn, has eroded purchasing power and fueled the rise of gold.
This argument can be made to fit practically any crisis situation. Gold looks good in the face of mounting inflation, gold looks attractive as we approach a deflationary recession. In reality, these gold bulls believe it doesn’t matter what’s causing the crisis, just that a crisis is coming. “Gold thrives on financial risk,” explained Foster, “the source of that risk doesn’t matter: inflation, deflation, currency crisis, debt crisis; and [current] financial stress is so acute that gold will thrive.”
